Finmeccanica's unit AugustaWestland says India did not cancel helicopter order

Agencies|

Updated: Feb 16, 2013, 08.39 PM IST

Giuseppe Orsi poses next to a helicopter during the opening ceremony of the new Terminal of Vertiporto dell'Urbe in Rome in this January 19, 2009 file photo. (Reuters)

LONDON: Italian defence group Finmeccanica's subsidiary AugustaWestland on Saturday denied that India had cancelled a $750 million order for a dozen helicopters and said authorities had asked for "clarifications" within a week's time.

On Friday, the Defence ministry said it was seeking to cancel the order.

"The Ministry of Defence has not cancelled the contract but has given notice requesting information within seven days," AugustaWestland said in a statement.

"AgustaWestland is preparing its answer to timely meet the Indian authorities' request." The British-based subsidiary said it was confident it would prove that all its past and present managers had conducted themselves in accordance with the law.

Three of the helicopters have already been delivered. The government launched its own inquiry after Orsi's arrest and investigators are due to travel to Italy next week to find out more about the case.

Finnmeccanica could be blacklisted in India for five years if found guilty of bribery. Defence analysts IHS Jane's says Finmeccanica has been pursuing opportunities in India valued at more than $12 billion in 2013.

The government has frozen payments for the AgustaWestland helicopters pending an inquiry after Italian police earlier this week arrested the former head of Finmeccanica, Giuseppe Orsi, for allegedly paying bribes to Indian politicians to win the contract.

Yesterday it was reported that the government has moved to cancel the Rs 3,760-crore contract for VVIP helicopters awarded in February 2010 to AgustaWestland. The ministry of defence has issued a showcause notice to the company seeking cancellation of the contract, an official statement said. The company has been given a week to respond, and the contract will remain suspended effective immediately.

In a detailed note on Thursday, the defence ministry had explained the history of the deal and said all processes had been followed.

The defence ministry statement said the government would invoke integrity pact and other clauses in the contract to seek action against the company. Since May last year, various state agencies have been in possession of adocument that should have raised red flags about AgustaWestland's business practices, in particular its willingness to engage middlemen with a tainted past.

In August 2009, Agusta Westland MD Bruno Spagnolini, now under arrest, signed a consulting agreement with C Edmonds Allen's Ganton Ltd to help "conclude rapidly and favourably" a potential sale of helicopters to Delhi Police.